Heinz acquires Australian food company for $288 million

07 October 2008

American ketchup maker, H.J. Heinz has announced the acquisition of Australian fruit juice and canned food maker Golden Circle through its Australian unit for $288 million in an all-cash deal.

According to the agreement, Heinz will buy all the shares of Golden Circle for $1.65 a share, a premium of 313 per cent to the closing price of $0.40 on 3 October.
Golden Circle shareholders will vote for the approval in December for the deal, which is subject to the mandatory regulatory approvals.

The deal will bring an end to the 61 year old Queensland company and one of the last remaining iconic Australian brands.

The board of Golden Circle and the company's largest shareholder, Anchorage Capital, which owns a 35-per cent stake in Golden Circle, have indicated that they would vote in favour of the acquisition. The board has also strongly recommended the shareholders to approve the deal.

In September 2007 Golden Circle spurned a $1 per share offer from Coca Cola-Amatil, the principal Coca-Cola licensee in Australia and independent manufacturer of its own soft drinks and mineral waters in favour of Anchorage, which pumped $35 million into the company by offering $.80 a share in a recapitalisation deal for a 35-per cent stake as Golden Circle had accumulated huge debts after running into heavy losses. 

The company had struggled for years due to stiff competition and some dubious business decisions made by the management which led to falling sales. The company last year transformed itself from a farmer owned co-operative to a publicly traded company in March.